House Financial Services hearing exposes sharp divisions over 'Clarity Act' market-structure bill

The House Committee on Financial Services continued a hearing on the proposed "Clarity Act," a bipartisan market‑structure bill intended to set rules for non‑security digital assets, with witnesses and members sharply divided over whether the draft would protect consumers and national security or create loopholes.

The committee heard testimony from academics and policy advocates who argued the bill contains major gaps in enforcement, anti‑money‑laundering (AML) standards and cybersecurity protections, and that its definitions and exemptions could allow many tokens to avoid securities or commodities rules. Supporters said the bill fills a regulatory vacuum and is necessary to keep innovation in the United States.

Carol House, a senior fellow at the Atlantic Council Geoeconomic Center, told the committee: “The current alignment and implementation of protections and digital assets is not working,” and said the Clarity Act’s text is “overly complex” in ways that could weaken consumer and market protections and leave national‑security vulnerabilities unaddressed. House recommended a “legislative framework for joint regulatory action by the SEC and CFTC,” citing Dodd‑Frank precedent for shared authorities.

Professor Hillary Allen of American University warned that the bill treats decentralization as if it were a reliable legal shield. “The most glaring fiction in…